The original semiconductor ETF has delivered even more than the 69% year-to-date return many headlines cite. VanEck Semiconductor ETF (NYSEARCA:SMH) opened 2026 at $360 and closed June 3 at $638, a 77.13% run in just over five months. Over the trailing year the fund went from $248 to that same $638, a 157.19% total. Over the same windows, SPDR S&P 500 ETF Trust (NYSEARCA:SPY) returned 10.61% year-to-date and 26.53% on the year. That spread is the article.
The arithmetic, in plain dollars
SMH is a market-cap-weighted basket of U.S.-listed semiconductor names with an expense ratio of 0.35%, cheap enough that fees do not blur the math. The fund’s yield is modest, so price return and total return read close enough that we can talk about one share moving from $360 to $638 and call it the honest picture. Five months of trading. No leverage. No structured product. Just the underlying basket repricing.
Compared with the S&P 500, SMH delivered ~7x the YTD move and ~6x the one-year move. That is a regime, not a rotation. And before anyone asks, SMH is unlevered, not a 3x leveraged product compounding in a low-vol uptrend. The constituents simply went up that much.
Recent weeks have been the loudest stretch. SMH rose 26% in the month ending June 3 and 7% in the final week alone, which is the kind of late-cycle acceleration that tends to produce kitchen-table conversations about whether your friend who bought in January is now retired.
What actually did the work
The simple answer is AI capex. The interesting answer is that SMH captured it through a basket that owns the design houses, the foundry, the memory makers, and the equipment vendors together, so when capital spending shows up at any layer of the stack, the fund collects rent from it.
The top of the book reads like an AI supply chain in order of importance: AMD near 10%, Broadcom and Micron near 9%, Taiwan Semiconductor, NVIDIA, ASML, and Intel clustered around 8%, with Lam Research, Applied Materials, and Texas Instruments rounding out the top ten. Note what is missing here: a single name does not carry the fund. NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) is up 15% year-to-date and 52% on the year, both of which are good numbers, neither of which gets you to SMH’s 77% and 157%. Memory (Micron), networking and custom silicon (Broadcom), advanced lithography (ASML), and the broader equipment complex did the heavy lifting on top of that.
NVIDIA’s most recent earnings explain why everything around it is also bid. Q1 FY27, reported May 20, put revenue at $81.61 billion, up 85.2% year over year, with Data Center revenue at $75.25 billion (up 92%) and Data Center networking at $14.8 billion (up 199%). Management guided next quarter to $91.0 billion in revenue and disclosed total supply commitments of $119.0 billion, which is the kind of forward booking number that pulls every fab, memory house, and tool maker in the basket along with it. CEO Jensen Huang called it "the largest infrastructure expansion in human history", which is the sort of thing CEOs say, except this time the order book is corroborating.
The mechanism, then, is sector concentration meeting a sustained, multi-vendor capex cycle that pays the whole stack. That is a structurally different (and more durable) setup than what carried, say, SMH’s 423% five-year run, where NVIDIA’s 1,125% ascent over the same window did a lot of the talking.
What has to keep happening
For SMH to keep printing numbers like these, three conditions need to hold, and a thoughtful reader can watch all three.
The first is hyperscaler capex guidance. The cloud platforms (NVIDIA’s named partners include Meta, Anthropic, Google Cloud, and AWS) need to keep raising rather than trimming their data center build numbers. The quarterly capex disclosures are public and they are the cleanest leading indicator the basket has. The second is the Data Center revenue line at NVIDIA and the networking segment specifically, because networking grew 263% in Q4 FY26 and 199% in Q1 FY27, and a deceleration there would be the first crack in the "the whole stack is paid" thesis. The third is the supply commitment figure. $119 billion is forward-booked demand. When that number stops climbing, the fund’s tailwind stops climbing with it.
The risks worth taking seriously are the quieter ones. China revenue is already excluded from NVIDIA’s guidance, with H20 shipments zeroed out, so any further restriction is mostly priced. The real risk is valuation. SMH is up 77% in five months against an S&P that is up 11%, and at some point the multiple does the thing multiples do. Reddit’s r/investing has been circulating threads about U.S. stocks surpassing 1929 valuation levels, along with Michael Burry’s "Fugazi" critique of the AI complex, which tells you the skepticism is already loud enough to be a contrary indicator on either side depending on your priors. GPU rental prices for H200s declined 38% through the second half of May, which is the kind of granular data point worth watching, because it is what a glut would look like before earnings catch up to it.
The one thing to take with you
SMH is the original semiconductor ETF, launched in 2000, and it has spent twenty-six years being a reasonably boring way to own the chip cycle. A 2,347% ten-year return tells you the basket compounds when the cycle is on. What is different this time is that the cycle is being driven by capex commitments that are already on the books, from buyers who have already raised the money, for chips that are already on order. The mechanism is durable enough to keep watching. The valuation is no longer the bargain it was on December 31. If you are reading this trying to decide whether you missed it, the honest answer is that you missed the easy 77%. Whether you missed the next leg depends entirely on whether hyperscaler capex guidance for 2027 comes in above or below the numbers already priced in, and that data will arrive in quarterly increments that anyone can read.
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